RRBs Must Treat Bullion Dealers as High Risk for KYC/AML
Current · Source: Reserve Bank of India · RBI/2010-11/366 · issued 12 Jan 2011 · ~1 min read
Quick answerRBI directs RRBs to classify bullion dealers and jewellers as high-risk accounts, requiring enhanced due diligence and intensified transaction monitoring under PMLA 2002.
The rule, in the simplest words
RRBs (Regional Rural Banks) must put bullion dealers (people who buy/sell gold bars) and jewellers into the 'high risk' group.
For these high-risk accounts, banks must do extra checks (enhanced due diligence) to know the customer better.
Banks must watch these accounts very closely (intensified transaction monitoring) for any strange activity.
If the bank sees something suspicious, it must report it to FIU-IND (the government's money-laundering watchdog) using a Suspicious Transaction Report (STR).
If a bank doesn't follow these rules, it can be fined under the Banking Regulation Act and PMLA (Prevention of Money Laundering Act).
How it plays out — a real example
Ravi, a KYC & compliance officer at an RRB in rural Maharashtra, opens a new account for a local jeweller. He immediately tags the account as 'high risk' and asks for extra documents like the jeweller's GST registration and ID proof. Every month, Ravi reviews the jeweller's transactions; if he sees a sudden big cash deposit that doesn't match the business, he files a Suspicious Transaction Report to FIU-IND to stay safe from penalties.
What changed
RBI has explicitly added bullion dealers (including sub-dealers) and jewellers to the list of high-risk customer categories for RRBs. These accounts now require enhanced due diligence and intensified transaction monitoring, with a mandate to file Suspicious Transaction Reports (STRs) to FIU-IND for any suspicious activity.
What it means for you
RRBs must update their KYC/AML policies to treat bullion and jewellery accounts as high risk, applying stricter verification and monitoring. This increases compliance burden but reduces money laundering risks. Non-compliance may attract penalties under the Banking Regulation Act and PMLA rules.
What you must do
Categorize all bullion dealer and jeweller accounts as high risk immediately.
Implement enhanced due diligence measures for these accounts as per existing KYC guidelines.
Set up intensified transaction monitoring for these high-risk accounts.
Train staff to identify suspicious transactions and file STRs with FIU-IND promptly.
Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
All Regional Rural Banks (RRBs), Compliance Officers and Principal Officers of RRBs, Bullion dealers, sub-dealers, and jewellers with accounts in RRBs
❓ Common questions
Why are bullion dealers and jewellers now considered high risk?
Cash-intensive businesses like bullion and jewellery trade are vulnerable to money laundering, so RBI mandates enhanced due diligence and monitoring for such accounts.
What happens if an RRB fails to comply with these guidelines?
Non-compliance may attract penalties under Section 35A of the Banking Regulation Act, 1949 and the Prevention of Money-laundering Rules, 2005.
Do these guidelines apply to all existing bullion dealer accounts?
Yes, RRBs must re-categorize all existing bullion dealer and jeweller accounts as high risk and apply enhanced due diligence and monitoring.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/366
RPCD.CO RRB.AML.BC.No. 46/03.05.33(E)/2010-11
January 12, 2011
The Chairmen
All Regional Rural Banks (RRBs)
Dear Sir,
Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/ Combating of Financing of Terrorism (CFT)/obligation of banks under PMLA 2002
Please refer to our circular RPCD. No. RRB.BC.81/03.05.33 (E)/2004-05 dated February 18, 2005 on 'Know Your Customer' (KYC) Guidelines - Anti Money Laundering Standards.
2. In terms of Para 2(vi) of the guidelines on 'Know Your Customer' norms and Anti- Money Laundering Measures annexed to the aforesaid circular, RRBs are required to apply enhanced due diligence measures on higher risk customers. Some illustrative examples of customers requiring higher due diligence have also been given in the paragraph under reference. It is further advised that in view of the risks involved in cash intensive businesses, accounts of bullion dealers (including sub-dealers) & jewellers should also be categorised by banks as ‘high risk’ requiring enhanced due diligence.
3. Accordingly, in terms of paragraph 4 of the guidelines annexed to the circular cited above, RRBs are also required to subject these ' high risk accounts ' to intensified transaction monitoring. High risk associated with such accounts should be taken into account by banks to identify suspicious transactions for filing Suspicious Transaction Reports (STRs) to FIU-IND.
4. These guidelines are issued under Section 35A of the Banking Regulation Act, 1949 read with Rule 7 of Prevention of Money-laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005. Any contravention thereof or non-compliance shall attract penalties under the relevant Act/Rules.
5. Compliance Officer/Principal Officer should acknowledge receipt of this circular to our Regional Office concerned.
Yours faithfully
(B.P.Vijayendra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/366 · issued 12 Jan 2011. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Regional Rural Banks (RRBs), Compliance Officers and Principal Officers of RRBs, Bullion dealers, sub-dealers, and jewellers with accounts in RRBs), your first concrete step on “RRBs Must Treat Bullion Dealers as High Risk for KYC/AML” is: “Categorize all bullion dealer and jeweller accounts as high risk immediately.” (RBI issued this 12 Jan 2011).
Circular: RBI/2010-11/366 -- RRBs Must Treat Bullion Dealers as High Risk for KYC/AML
Issued: 12 Jan 2011
Action required: Categorize all bullion dealer and jeweller accounts as high risk immediately.
Action required: Implement enhanced due diligence measures for these accounts as per existing KYC guidelines.
Action required: Set up intensified transaction monitoring for these high-risk accounts.
Action required: Train staff to identify suspicious transactions and file STRs with FIU-IND promptly.
Action required: Acknowledge receipt of this circular to your respective RBI Regional Office.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6213&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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